ISSUE BRIEF JANUARY 2020 States Work to Make Individual Market Health Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership Justin Giovannelli JoAnn Volk Kevin Lucia Associate Research Professor Research Professor Research Professor Georgetown University Center on Georgetown University Center on Georgetown University Center on Health Insurance Reforms Health Insurance Reforms Health Insurance Reforms ABSTRACT TOPLINES ISSUE: The individual health insurance markets of most states are In 2020, states will continue stable but face ongoing challenges. Federal policies to promote limited- to pursue policies to bring coverage products for sale outside the individual market, concerns about comprehensive coverage within reach of everyone. the affordability of comprehensive coverage, and uncertainty about the durability of the Affordable Care Act have put the onus on state Most states have adopted policymakers from across the political spectrum to explore options for reforms to make comprehensive safeguarding and improving their residents’ coverage. coverage more affordable, but GOAL: Understand actions states have taken to affect access to and long-term solutions will require affordability of comprehensive health coverage. federal leadership. METHODS: Analysis of applicable laws, regulations, and guidance of the 50 states and the District of Columbia, as well as of relevant legislation proposed in these jurisdictions during the 2018 and 2019 legislative sessions. KEY FINDINGS AND CONCLUSIONS: Most states have adopted one or more policy initiatives designed to make comprehensive coverage more affordable, such as a reinsurance program, financial incentives for individuals to maintain coverage, or increased oversight of skimpy, short- term insurance products. However, most effective reforms will require a sustained and significant financial commitment that states may have difficulty securing. Lasting solutions are likely to require federal action. States Make Individual Market Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership 2 BACKGROUND officials and supported by the Trump administration Though the Affordable Care Act (ACA) significantly changed seeks to have the courts strike down the ACA’s preexisting how individual market health insurance is regulated, it condition protections, premium subsidies, and Medicaid preserved states’ power to implement policies designed expansion.4 Together, these developments have challenged to make that coverage more affordable.1 Recent regulatory state lawmakers from across the political spectrum to explore options for safeguarding and improving residents’ coverage. changes by the Trump administration to promote limited- benefit products not governed by ACA rules have provided In 2018, we examined what states had done to improve states still more policy choices to consider.2 access to comprehensive individual market coverage in seven key policy areas over which they exercise authority.5 States have increasing reason to exercise this authority. At that time, nearly half of states had adopted one or more Though most states’ individual markets are experiencing policy initiatives in these areas, such as a reinsurance a second year of stability, premiums and cost-sharing program, financial incentives for individuals to maintain continue to impose significant financial burdens on many coverage, or increased oversight of skimpy, short-term Americans.3 The administration’s loosening of rules insurance products.6 governing limited-benefit products did not just give states additional policymaking flexibility — it also exposed This brief updates our analysis of state efforts to states’ insurance markets and consumers to substantial strengthen individual market coverage and finds that new risks that have drawn policymakers’ attention. at least a dozen states have enacted legislation within Meanwhile, uncertainty about the durability of the ACA the past year to make comprehensive coverage more drags on; a federal lawsuit brought by Republican state affordable (Exhibit 1). Exhibit 1. State Policies Affecting Access to Comprehensive Individual Market Health Insurance Policy area Description States may draw on federal and state dollars to establish reinsurance programs that reduce market Premium stabilization programs volatility and moderate premiums. Requirements to maintain adequate States may impose a financial penalty on individuals who can afford to maintain adequate health coverage coverage but choose to be uninsured. Financial assistance to improve States may provide additional premium and cost-sharing assistance to consumers eligible for federal coverage affordability subsidies or extend these benefits to those who do not currently receive federal assistance. States may establish additional oversight, above minimum federal requirements, for types of coverage, Regulation of non-ACA-compliant such as short-term and association health plans, which do not comply with the consumer protections coverage of the ACA. Alternatively, states may attempt to encourage enrollment in these plans or in products exempted from insurance regulation by the state. States may leverage insurers’ participation in public insurance programs or markets to encourage Rules to promote marketplace participation in the marketplace. States also may merge their individual and small-group markets or competition prohibit insurers from bypassing the ACA marketplace when selling individual market coverage. States may sponsor a public coverage option to be offered through, or outside, the ACA marketplace; permit State coverage options certain individuals to “buy in” to a public coverage program, such as Medicaid, for which they are not otherwise eligible; or establish a Basic Health Program for lower-income residents, as authorized by the ACA. States may require insurers that offer coverage to adopt uniform cost-sharing parameters for certain plans. Standard plan designs States may further require that all health plans offered in the market adhere to these standard parameters. States that have chosen to operate their own ACA marketplaces may facilitate enrollment in marketplace Open enrollment extensions coverage by extending the annual open-enrollment window beyond the minimum 45-day period set by federal rules. States may prohibit insurers from continuing to offer transitional (or “grandmothered”) coverage, which Transitional policies does not satisfy key ACA consumer protections. Data: Authors’ analysis of applicable federal and state statutes, regulations, and guidance. commonwealthfund.org Issue Brief, January 2020 States Make Individual Market Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership 3 FINDINGS their own programs in 2020, while two others (Georgia and Pennsylvania) signaled they will seek federal sign-off for a Reinsurance: Reducing Premiums and Market reinsurance waiver for 2021 (Exhibit 2). Volatility While waiver-supported reinsurance has become a fairly The ACA’s temporary federal reinsurance program straightforward policy option, states have innovated lowered premiums and stabilized markets between 2014 with implementation and funding. In Colorado, and 2016; premium hikes in the following year were policymakers structured the program to provide the attributable in part to the program’s end.7 Though many greatest level of assistance to the geographic areas hardest state policymakers and stakeholders have urged that the hit by high premiums. The state also initially sought to program be reestablished, proposals to do so stalled in the fund the program by requiring hospitals to bring their last Congress.8 In the absence of federal action, a diverse reimbursement rates into line with an external benchmark group of states has moved ahead. In 2017 and 2018, seven (i.e., Medicare plus a percentage). Because the Trump states established their own reinsurance programs, funded administration signaled it would not approve a waiver that in part through the ACA’s Section 1332 waiver program.9 included such a payment regulation, Colorado ultimately These initiatives have lowered individual market premiums adopted alternative funding mechanisms, including an by an average of 20 percent, primarily benefiting consumers assessment on hospitals. In Pennsylvania, policymakers who are not eligible for federal subsidies and who bear enacted bipartisan legislation that directs the state to the full brunt of premium increases.10 During 2019, five assume control of its ACA marketplace from the federal additional states — Colorado, Delaware, Montana, North government, operate it at a lower cost, and use the savings Dakota, and Rhode Island — secured approval to launch to cover the state’s share of reinsurance program funding. Exhibit 2 States That Operate Individual Market Reinsurance Programs Supported by Exhibit 2. States That Operate Individual Market Reinsurance Programs Supported by Section 1332 Waiver Funding Waiver Funding Section 1332 D.C. Notes: Section 1332 of the ACA authorizes states to apply to waive specified provisions of the health law to facilitate state-specific programs for improving coverage. If a Notes: Section 1332 of waiver”authorizes states to apply to waive specified provisions of the health lawentitled tostate-specific programspassed through to it for state’s “innovation waiver” state’s “innovation the ACA program is forecast to reduce federal spending, the state is to facilitate have these savings for improving coverage. If a purposes of implementing program is forecast to reduce federal spending, the state is entitled to have these savings passed through to it for purposes of implementing the program. The states identified in this map have the program. The states identified in this waivers that secured,federal “pass-through” funds to partially financewaivers that use these federal “pass-through” funds to partially secured, or are seeking, approval for innovation map have use these or are seeking, approval for innovation the state’s reinsurance program. finance the state’s reinsurance federal and state statutes, regulations, and guidance. Data: Authors’ analysis of applicable program. Data: Authors’ analysis of applicable federal and state statutes, regulations, and guidance. Source: Justin Giovannelli, JoAnnVolk, and Kevin Lucia, States Work to Make Individual Market Health Coverage More Affordable, But Long-Term Solutions commonwealthfund.org Call for Federal Leadership (Commonwealth Fund, Jan. 2020). Issue Brief, January 2020 States Make Individual Market Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership 4 Requirements to Maintain Coverage: Broadening costs and reducing plan choices for residents who need the Risk Pool comprehensive coverage. Since Congress eliminated the ACA’s tax penalty for Four states and the District of Columbia have now individuals who fail to maintain coverage in the 2017 established tax penalties for people who can afford to tax bill, at least 10 state legislatures weighed whether maintain health coverage but choose not to (Exhibit 3).12 to adopt state versions of the individual mandate. Taking advantage of the flexibility to craft the penalty to Though politically divisive at the national level, these suit state needs, New Jersey and Rhode Island use revenue requirements help make markets more stable and raised by the mandate to help fund their reinsurance premiums more affordable by expanding the risk pool.11 programs, while California will use penalty dollars to A mandate also can give states flexibility to discourage provide greater financial assistance to people who buy individuals from switching between skimpy coverage coverage. In Maryland, efforts to pass an individual products when healthy and comprehensive coverage mandate foundered. As an alternative, the state adopted when sick. For instance, a state can define the types of a program to facilitate enrollment by allowing uninsured coverage that satisfy its mandate by excluding products, tax filers to begin the process of signing up for ACA such as short-term plans and health care sharing marketplace or Medicaid coverage by checking a box ministries, which discriminate based on health status. on their tax return.13 The new law also obligates state Doing so may reduce the risk that such arrangements government to establish processes for implementing a tax segment the market between healthy and sick, driving up penalty in the future and requires study of the issue. Exhibit 3 Exhibit 3.That Require Individuals to Maintain Adequate Health Coverage States States That Require Individuals to Maintain Adequate Health Coverage D.C. Notes: The ACA requires most individuals to maintain “minimum essential” health coverage or pay a tax penalty (the individual mandate). Changes in federal law, effective in 2019,most individuals to maintain "minimumbut did not repeal the or pay a tax penalty (the individual mandate). Changes in federal law, effective in 2019, reduced this tax Notes: The ACA requires reduced this tax penalty to $0, essential" health coverage underlying requirement to maintain coverage. This map identifies states that penalty to $0, but did not repeal the underlying requirement to maintain coverage. This map identifies states that require residents to maintain adequate health coverage whether or not the state require residents to maintain adequate health coverage — whether or not federal tax penalty. Vermont has not established a financial fail to doother enforcement mechanism to imposes a penalty on individuals who fail to do so — notwithstanding the elimination of the the state imposes a penalty on individuals who penalty or so — notwithstanding the elimination of the federal taxmandate. Vermont has not established a financial penalty or other enforcement mechanism to promote compliance with its promote compliance with its coverage penalty. coverage mandate. of applicable federal and state statutes, regulations, and guidance. Data: Authors’ analysis Data: Authors’ analysis of applicable federal and state statutes, regulations, and guidance. Source: Justin Giovannelli, JoAnnVolk, and Kevin Lucia, States Work to Make Individual Market Health Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership (Commonwealth Fund, Jan. 2020). commonwealthfund.org Issue Brief, January 2020 States Make Individual Market Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership 5 Coverage Subsidies: Improving Affordability financial assistance to residents whose incomes (between The ACA’s premium and cost-sharing subsidies have 400% and 600% of poverty) render them ineligible for helped make health insurance more affordable for the federal subsidy program (Exhibit 4).15 This measure is millions of Americans. But there are funding and expected to make coverage more affordable for nearly a eligibility limits: the program provides substantially million Californians and, together with the state’s other less generous assistance for those with incomes above reforms, newly insure more than 200,000.16 250 percent of the federal poverty level and phases out entirely at four times the threshold. This has meant that State Coverage Options: Increasing Access, many people still face difficulty affording coverage.14 Reducing Costs Accordingly, states have considered whether to provide Policymakers in states that have embraced the ACA additional help, by using state dollars to 1) increase the increasingly have worked to develop a government- amount of assistance available to low- and middle-income sponsored coverage option to achieve more affordable individuals, for whom the current federal subsidy may be coverage, greater marketplace competition, and improved insufficient, and/or 2) offer subsidies to residents who are access to care. More than a dozen states considered ineligible for federal assistance. whether to establish or study the implementation of In June 2019, California enacted a law that does both. a public option or a public coverage “buy-in” program Starting in 2020, the state began providing wraparound during the most recent legislative session; five states have subsidies to individuals receiving ACA tax credits as well as already published reports analyzing such proposals.17 Exhibit 4 Exhibit 4. States That Provide Subsidies for Individual Market Coverage States That Provide Subsidies for Individual Market Coverage D.C. Notes: The ACA provides federal subsidies to reduce the cost of individual market health insurance for eligible individuals. Premium tax credits are available to otherwise eligible individuals with householdthe cost ofbetweenmarket health insurancetheeligible individuals. Premium tax credits are available to otherwise eligible individuals with Notes: The ACA provides federal subsidies to reduce income individual 100% and 400% of for federal poverty level (FPL) who enroll in coverage through an ACA marketplace, and cost-sharing subsidies areand 400% of the federal poverty level (FPL) who enroll in coverage through an ACA marketplace, and cost-sharing subsidies are available identifies stateswith household income between 100% available to such individuals with incomes between 100% and 250% FPL who enroll in a silver-tier plan. This map to such individuals incomes between 100% and 250% FPL who enroll in a silver tier plan. This map identifies states that make available separate, state-funded subsidies to defray the cost of ACA-compliant individual that make available separate, state-funded an additional premium subsidy forof ACA-compliant federal premium tax credits, orcoverage: for example, by providing whose incomes market health coverage: for example, by providing subsidies to defray the cost individuals receiving individual market health a subsidy for individual market consumers an additional premium subsidy for individuals receiving federal premium tax provided premium subsidiesindividual market consumers premium tax credits, Medicaid, or the State’s Basic Health render them ineligible for federal coverage assistance. In 2017, Minnesota credits, or a subsidy for for enrollees not eligible for federal whose incomes render them ineligible for federal coverage(MinnesotaCare). 2017, Minnesota provided premium subsidies for enrollees not eligible for federal premium tax credits, Medicaid, or the State’s Basic Health Program assistance. In Data: Authors’ analysis of applicable federal and state statutes, regulations, and guidance. Program (MinnesotaCare). Data: Authors’ analysis of applicable federal and state statutes, regulations, and guidance. Source: Justin Giovannelli, JoAnnVolk, and Kevin Lucia, States Work to Make Individual Market Health Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership (Commonwealth Fund, Jan. 2020). commonwealthfund.org Issue Brief, January 2020 States Make Individual Market Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership 6 In May 2019, Washington became the first and only Standard Plan Designs: Promoting Value-Based state to approve a public option (Exhibit 5). The Care, Helping Consumers Shop for Coverage Washington model — known as Cascade Care — is The ACA requires all individual market health plans to effectively a hybrid public–private coverage program in cover broadly similar benefits, adhere to limits on cost- sharing, and fall within standard actuarial value tiers. This which the state will contract with private insurers to is in large part to ensure coverage meets consumers’ needs, administer and sell standardized health plans on the but also to make it easier for consumers to understand ACA marketplace. The public-option plans are intended and choose among their coverage options. Back when to reduce health care costs by capping payments to these protections were first implemented, six states and providers at an average of 160 percent of Medicare the District of Columbia decided to require plans to rates. This benchmark pricing mechanism is expected incorporate standardized cost-sharing parameters, such as to produce modestly lower plan premiums when the uniform deductibles and copayments for certain services coverage becomes available in 2021, helping individual (Exhibit 6).18 States hoped the standard designs would market consumers who are not eligible for coverage further improve consumers’ experiences by facilitating apples-to-apples comparisons of plans’ premiums, subsidies. Subsidized consumers also may benefit, networks, and quality. Some policymakers also viewed because the plans will follow standardized designs that standardization as an opportunity to ensure plans provide ease cost-sharing requirements for high-value care and, sufficient up-front value to enrollees by, for example, over time, increase plan competition because of the requiring that high-value services, such as primary care, expanded risk pool. not be subject to a deductible. Exhibit 5 Exhibit 5.with Public Coverage Optionsfor Individual Market Consumers States States with Public Coverage Options for Individual Market Consumers State will offer a state-sponsored coverage option through its ACA marketplace State operates a Basic Health Program D.C. Notes: States may adopt a program, such as a “public option” or “Medicaid buy-in,” which offers individual market consumers the option of enrolling in coverage that is sponsored and/or administered by the state. Under Section 1331 offers individual market consumers the optiona Basic Health Programis sponsoredindividuals with Notes: States may adopt a program, such as a "public option" or "Medicaid buy-in," which of the ACA, states may also establish of enrolling in coverage that (BHP) for and/or administered incomes upUnder Section 1331federal povertymay also establish a Basic Health Program (BHP) forindividuals with incomes up to 200% of the federal povertyfunded by a combination of by the state. to 200% of the of the ACA, states level who would otherwise be eligible for individual market coverage. The BHP, which is level who would otherwise be state and federal dollars,coverage. The BHP, which is funded by at least as comprehensive and affordable as subsidized ACA marketplace coverage.affordable asidentifies eligible for individual market must provide coverage that is a combination of state and federal dollars, must provide coverage that is at least as comprehensive and This map subsidized ACA marketplace coverage. This map identifies states that have established a public option, Medicaid buy-in, or other similar program, or that operate a BHP. The map does not include state actions states that have established a public option, Medicaid buy-in, orwill begin operation in 2021. or that operate a BHP. The map does not include state actions related to related to the ACA's Medicaid expansion. Washington’s public option program other similar program, the ACA’s Medicaid expansion.federal and state statutes, regulations, and guidance. Data: Authors’ analysis of applicable Washington’s public option program will begin operation in 2021. Data: Authors’ analysis of applicable federal and state statutes, regulations, and guidance. Source: Justin Giovannelli, JoAnnVolk, and Kevin Lucia, States Work to Make Individual Market Health Coverage More Affordable, But Long-Term Solutions commonwealthfund.org Call for Federal Leadership (Commonwealth Fund, Jan. 2020). Issue Brief, January 2020 States Make Individual Market Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership 7 Exhibit 6 Exhibit 6.That Require Standardized Individual Market Health Plans States States That Require Standardized Individual Market Health Plans State requires all individual market plans to be standardized State requires participating individual market insurers to offer some plans with standardized designs D.C. Notes: The ACA requires all individual market health plans to cover broadly similar benefits, adhere to overall limits on cost-sharing, and fall within standard actuarial value tiers. This map identifies states that also require participating individual market insurers to offer plans that incorporate standardized cost-sharing parameters, such as uniform deductibles and copayments for certain services. Washington’s standardized plan requirement will take effect in 2021. Data: Authors’requires all of applicable federal andto coverstatutes, regulations, and guidance. on cost-sharing, and fall within standard actuarial value tiers. This map identifies Notes: The ACA analysis individual market health plans state broadly similar benefits, adhere to overall limits states that also require participating individual market insurers to offer plans that incorporate standardized cost-sharing parameters, such as uniform deductibles and copayments for certain services. Washington’s standardized plan requirement will take effect in 2021. Data: Authors’ analysis of applicable federal and state statutes, regulations, and guidance. Though initial attempts to operationalize standardized benefits, or charge a higher premium to consumers with a designs during the rollout of the ACA marketplaces seemed Work to Make Individual Market HealthBecause ofAffordable,limitations, healthy Source: Justin Giovannelli, JoAnnVolk, and Kevin Lucia, States preexisting condition. Coverage More these But Long-Term Solutions Call for Federal Leadership (Commonwealth Fund, Jan. 2020). to have little effect on consumers’ shopping experiences, people who enroll generally incur a lower upfront cost than states have continued to refine their approaches. For its part, they would with unsubsidized ACA-compliant coverage. In the federal government unveiled standard plan designs and 2018, the Trump administration relaxed federal regulations shopping tools on HealthCare.gov in the fall of 2016 before to allow these short-term products to have an initial term a new administration changed course and eliminated the of 364 days and, with renewal, last for up to 36 months. policy in 2018. Since this change was announced, 12 states and the Still, cost-sharing standardization continues to attract state District of Columbia have strengthened consumer interest, particularly as a way of addressing affordability protections and set a tighter duration limit for short- challenges and promoting high-value care. Washington term products (Exhibit 7). They have done so to guard became the eighth state to adopt this policy, making against the likelihood that such plans will siphon standard plan designs a pillar of its Cascade Care reforms. healthy risks from their ACA markets, potentially raising Meanwhile, Colorado policymakers also hope to implement prices and decreasing choice for those who remain, and standard plan designs as part of a public option program that to protect consumers from inadequate coverage and the state’s legislature will consider in early 2020. misinformation. Most of these states have limited the duration of these products so consumers may use them Regulation of Non-ACA-Compliant Coverage: as a short-term coverage option and not a long-term Reducing Market Segmentation and Consumer replacement for comprehensive insurance. Some states Confusion also have required the plans to comply with additional Short-term, limited-duration insurance is exempt from the consumer protections, cover specified benefits, or adhere ACA’s reforms. These products can deny coverage, limit to marketing restrictions. For example, Maine requires commonwealthfund.org Issue Brief, January 2020 States Make Individual Market Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership 8 Exhibit 7 Exhibit 7. State Regulation of Short-Term,Limited-Duration Insurance State Regulation of Short-Term, Limited-Duration Insurance State prohibits underwritten STLDI* State limits the total length of time a consumer may be enrolled in underwritten STLDI to less than 364 days** D.C. State limits the initial contract duration of STLDI to less than 364 days*** Notes: STLDI = short-term, limited-duration insurance. Short-term policies are not subject to the federal consumer protections of the ACA. Under federal regulations finalized in August 2018, short-term policies may provide coverage for a period of 364 days and may be renewed, at the discretion of the insurance company, for up to 36 months. This map identifies states that, by limiting the maximum duration of short-term coverage to less than 364 days, or by applying state law consumer protections to such coverage, impose limitations on the sale of short-term plans than are more strict than those mandated under the default federal approach. Notes: STLDI = short-tern, limited-duration or bar short-term insurers from discriminating on the basis of an applicant’sto the federal consumer protections of the ACA. Under federal regulations * The states identified in blue entirely prohibit short-term coverage insurance. Short-term policies are not subject health status. California prohibits the issuance of of any health insurance policy with a duration of less than 12 months. finalized identified as having limited the total length of time a consumer may be enrolled in underwritten short-term coverage364 days and if it prohibits renewed, at theshort-term policies consecutively, closing a loophole that otherwise may ** A state is in August 2018, short-term policies may provide coverage for a period of to less than 364 days may be the issuance of multiple discretion of the insurance company, for up to 36 months. This mapofidentifies states that, by open issuing the same short-term policy to an enrolleeupcoming year. terms; and 2) from issuing a than 364 days, orto theapplying statethan once in any given year. permit continuous enrollment in such plans. Delaware prohibits insurers from: 1) Washington prohibits the issuance a short-term policy during the annual limiting the maximum duration the short-term coverage to less enrollment period, for coverage beginning in of for back-to-back different short-term policy by same individual more law consumer protections to such coverage, impose duration of underwritten short-term of short-term 364 days if a short-termmore strict thanspecified duration would become subject to one or morefederal approach. *** A state is identified as having limited the initial contract limitations on the sale coverage to less than plans than are plan lasting longer than a those mandated under the default of the following state consumer protections: guaranteed issue, guaranteed renewability, or required coverage of essential health benefits. Such states typically impose limitations on the renewal of short-term policies, but, in most cases, do not prohibit insurers from issuing multiple new short- * term policies consecutively. Connecticut makes consecutive short-term policies subject to certain preexisting condition coverage requirements. Hawaii from discriminating on policy to an individual who was eligible to purchase coverage through The states identified in blue entirely prohibit short-term coverage or bar short-term insurers prohibits the issuance of a short-term the basis of an applicant’s health status. the ACA marketplace during an open or special enrollment period in the previous calendar year.policy with a duration of less than 12 months. California prohibits the issuance of of any health insurance Data: Authors’ analysis of applicable federal and state statutes, regulations, and guidance. ** A state is identified as having limited the total length of time a consumer may be enrolled in underwritten short-term coverage to less than 364 days if it prohibits the issuance of multiple short-term policies consecutively, closing a loophole that otherwise may permit continuous enrollment in such plans. Source: Justin Giovannelli, JoAnnVolk, and Kevin Lucia, States Work to Make Individual Market Health Coverage More Affordable, But Long-Term Solutions Delaware prohibits insurers from: 1) issuing Leadership (Commonwealth Fund,to an enrollee for back-to-back terms; and 2) from issuing a different short-term policy Call for Federal the same short-term policy Jan. 2020). to the same individual more than once in any given year. Washington prohibits the issuance of a short-term policy during the annual open enrollment period, for coverage beginning in the upcoming year. *** A state is identified as having limited the initial contract duration of underwritten short-term coverage to less than 364 days if a short-term plan lasting longer than a specified duration would become subject to one or more of the following state consumer protections: guaranteed issue, guaranteed renewability, or required coverage of essential health benefits. Such states typically impose limitations on the renewal of short-term policies, but, in most cases, do not prohibit insurers from issuing multiple new short-term policies consecutively. Connecticut makes consecutive short-term policies subject to certain preexisting condition coverage requirements. Hawaii prohibits the issuance of a short-term policy to an individual who was eligible to purchase coverage through the ACA marketplace during an open or special enrollment period in the previous calendar year. Data: Authors’ analysis of applicable federal and state statutes, regulations, and guidance. in-person sales to address concerns about online and DISCUSSION phone sales, while Washington prohibits the sale of The individual markets of most states are stable. short-term products during the annual enrollment period Rates have continued to moderate and, in many for ACA plans.19 California and Rhode Island have gone places, decrease, while insurer participation on further and effectively ban short-term products, joining the marketplaces increased again in 2020.21 Still, three states — Massachusetts, New York, and New comprehensive coverage remains unaffordable for many Jersey — that prohibited the plans even before the federal and there is no indication that the federal government rule change. In contrast, three states — Arizona, Indiana, will implement policies to address this issue. To the and Oklahoma — opted to embrace the opportunity to contrary, the administration remains committed to promote these skimpier products by revising state law to policies likely to increase market segmentation, making conform with the new, more permissive federal rule. 20 comprehensive coverage more expensive. commonwealthfund.org Issue Brief, January 2020 States Make Individual Market Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership 9 Against this backdrop, an increasing number of states NOTES have acted in ways likely to improve affordability and plan 1. Sara R. Collins and Jeanne M. Lambrew, Federalism, the choice. In 2020, states will continue to pursue reinsurance, Affordable Care Act, and Health Reform in the 2020 Election respond to the effects of skimpy coverage products on (Commonwealth Fund, July 2019). their health insurance markets, and study other states that 2. Justin Giovannelli and Kevin Lucia, “Court Strikes Down have undertaken broader reforms to bring comprehensive a Trump Administration Rule Designed to Circumvent the coverage within reach of all residents. Affordable Care Act,” To the Point (blog), Commonwealth But there are limits to states’ authority and resources. Fund, Apr. 5, 2019; Kevin Lucia et al., “In the Wake of New While the Trump administration has encouraged federal Association Health Plan Standards, States Are Exercising Authority to Protect Consumers, Providers, and Markets,” waivers to promote skinny plans, it has made clear in To the Point (blog), Commonwealth Fund, Nov. 27, 2018; agency guidance and the statements of high-ranking and Dania Palanker, JoAnn Volk, and Kevin Lucia, “Short- officials that such flexibility is not available for states Term Health Plan Gaps and Limits Leave People at Risk,” interested in offering residents a public coverage option. To the Point (blog), Commonwealth Fund, Oct. 30, 2018. Meanwhile, many effective state reforms will require a sustained and significant financial investment. California’s 3. Rachel Fehr, Cynthia Cox, and Larry Levitt, Individual groundbreaking efforts to improve coverage likely will Insurance Market Performance in Early 2019 (Henry J. cost more than $400 million. While the cost of other Kaiser Family Foundation, June 2019); and Cynthia Cox, states’ reforms will not likely approach this magnitude, Rachel Fehr, and Larry Levitt, Individual Insurance Market Performance in 2018 (Henry J. Kaiser Family Foundation, state budgetary constraints make financing coverage May 2019). improvements difficult in many places. Lasting solutions are likely to require federal commitment. 4. MaryBeth Musumeci, Explaining Texas v. U.S.: A Guide to the 5th Circuit Appeal in the Case Challenging the ACA (Henry J. Kaiser Family Foundation, July 2019). 5. Justin Giovannelli, Kevin Lucia, and Sabrina Corlette, “To Understand How Consumers Are Faring in the Individual Health Insurance Markets, Watch the States,” To the Point (blog), Commonwealth Fund, July 18, 2018; and Justin Giovannelli, Kevin Lucia, and Sabrina Corlette, “What Is Your State Doing to Affect Access to Adequate Health Insurance?,” Commonwealth Fund, updated Sept. 6, 2019. 6. Ibid. For purposes of tallying state actions in this issue brief, we count the District of Columbia as a state. 7. American Academy of Actuaries, Drivers of 2017 Health Insurance Premium Changes (American Academy of Actuaries, May 2016); and American Academy of Actuaries, Drivers of 2016 Health Insurance Premium Changes (American Academy of Actuaries, Aug. 2015). commonwealthfund.org Issue Brief, January 2020 States Make Individual Market Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership 10 8. See, e.g., American Cancer Society Cancer Action for federal coverage subsidies. Other states are weighing Network et al., Congress Must Act Now to Prevent Premium whether to follow. Minnesota, which provided a one-time Spikes and Coverage Losses for Millions of Americans, premium subsidy to residents in 2017, this year debated Say 20 Patient and Consumer Groups (American Lung a plan put forward by the state’s governor to offer more Association, Mar. 2018); America’s Health Insurance Plans robust coverage assistance. A budget agreement ultimately et al., Health Care Coalition Letter to Leadership on Market directed funds towards renewing the state’s reinsurance Stability (AHIP, March 2018); and State Health Exchange program, instead. Meanwhile, recently enacted legislation Leadership Network, January 30, 2018 Letter to Senators directs Washington’s state marketplace to develop a plan, Alexander, Murray, Collins, and Nelson (SHELN, Jan. 2018). to be completed by late 2020, for implementing state premium subsidies for individuals with incomes up to 500 9. David Blumenthal et al., “States Take the Lead on percent of FPL. Reinsurance to Stabilize the ACA Marketplaces,” To the Point (blog), Commonwealth Fund, May 22, 2018. 16. Covered California, Covered California Policy and Action Items (Covered California, June 2019). 10. Chris Sloan, Neil Rosacker, and Elizabeth Carpenter, State-Run Reinsurance Programs Reduce ACA Premiums by 17. Delaware, Senate Concurrent Resolution 70 Study 19.9% on Average (Avalere, Mar. 2019). Group: Final Report (Jan. 2019); Manatt Health Strategies, A Promising Strategy for an Affordable Medicaid Buy-In 11. See, e.g., Covered California, the Massachusetts Health Option in Colorado: An Initial Study of a Medicaid Buy-In Connector, and the Washington Health Benefit Exchange, Plan (Manatt Health Strategies, Dec. 2018); Chiquita New Analysis Finds Record Number of Renewals for Leading State-Based Marketplaces, but Lack of Penalty Is Brooks-LaSure et al., Evaluating Medicaid Buy-In Options Putting Consumers at Risk (May 2019); Covered California, for New Mexico (Manatt Health Strategies, Dec. 2018); Individual Markets Nationally Face High Premium Massachusetts Health Connector, Massachusetts Medicaid Increases in Coming Years Absent Federal or State Action, Buy-In: Feasibility of Establishing a Small Employer with Wide Variation Among States (March 2018); and Premium Sharing Plan for Participation in MassHealth Massachusetts Health Connector, The Massachusetts (Oct. 2018); and Oregon Legislature Legislative Policy Individual Mandate: Design, Administration, and Results and Research Office, Universal Access to Health Care (Nov. 2017). Workgroup: Medicaid Buy-In Proposals (Sept. 2018). 12. Vermont also has enacted a requirement to maintain 18. Connecticut, the District of Columbia, Massachusetts, coverage but has yet to establish an enforcement New York, Oregon, and Vermont require participating mechanism. insurers to offer some plans that adhere to standardized designs while permitting additional plan offerings that use 13. Stan Dorn, “Maryland’s Easy Enrollment Health a nonstandard design. In California, all individual market Insurance Program: An Innovative Approach to Covering plans must be standardized. the Eligible Uninsured,” Health Affairs Blog, May 13, 2019. 19. Dania Palanker, Maanasa Kona, and Emily Curran, 14. In addition, individuals whose incomes otherwise States Step Up to Protect Insurance Markets and Consumers would qualify them for federal financial assistance may be from Short-Term Health Plans (Commonwealth Fund, May rendered ineligible because of their immigration status. A 2019). state could use its own funds to subsidize coverage for this population but could not do so via its ACA marketplace 20. Arizona Senate Bill 1109 (2019); Indiana House Bill 1631 absent federal approval of a Section 1332 waiver. (2019); and Oklahoma Senate Bill 993 (2019). 15. The new law puts California in the company of 21. Centers for Medicare and Medicaid Services, Plan Massachusetts and Vermont, states that for years have Year 2020 Qualified Health Plan Choice and Premiums in provided wraparound benefits to individuals eligible HealthCare.gov States (CMS, Oct. 2019). commonwealthfund.org Issue Brief, January 2020 States Make Individual Market Coverage More Affordable, But Long-Term Solutions Call for Federal Leadership 11 ABOUT THE AUTHORS ACKNOWLEDGMENTS Justin Giovannelli, J.D., is an associate research professor The authors thank Sabrina Corlette for her thoughtful at the Georgetown University Health Policy Institute’s comments and suggestions. We also thank Emily Curran, Center on Health Insurance Reforms. His research focuses Maanasa Kona, and Rachel Schwab for their valuable primarily on the implementation of the Affordable Care contributions to the research for this brief. Act’s market reforms and health insurance exchanges at the federal and state levels. Mr. Giovannelli received his law degree from the New York University School For more information about this brief, please contact: of Law and his master’s degree in public policy from Justin Giovannelli, J.D. Associate Research Professor Georgetown’s Public Policy Institute. Center on Health Insurance Reforms JoAnn Volk, M.A., is a research professor at the Health Policy Institute Georgetown University Center on Health Insurance McCourt School of Public Policy Reforms. Her work is focused on the regulation of private Georgetown University health insurance under the Affordable Care Act and the Justin.Giovannelligeorgetown.edu effect of health coverage reform on access, affordability, and adequacy of coverage for consumers. Ms. Volk holds a master’s degree in public policy from Johns Hopkins University, with a concentration in health policy. Kevin Lucia, J.D., M.H.P., is a research professor at the Georgetown University Center on Health Insurance Reforms. His research focuses on the regulation of private health insurance, with an emphasis on access, affordability, and adequacy of coverage. Mr. Lucia received his law degree from the George Washington School of Law and his master’s degree in health policy from Northeastern University. Editorial support was provided by Deborah Lorber. commonwealthfund.org Issue Brief, January 2020 About the Commonwealth Fund The mission of the Commonwealth Fund is to promote a high-performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, and people of color. Support for this research was provided by the Commonwealth Fund. The views presented here are those of the authors and not necessarily those of the Commonwealth Fund or its directors, officers, or staff.